News Release

Capstone Infrastructure Corporation Reports Strong Third Quarter 2013 Results

  • Quarterly and year-to-date revenue increased by 7.6% and 6.2%, respectively, mostly due to higher overall power production and higher regulated water rates at Bristol Water
  • Quarterly and year-to-date Adjusted EBITDA increased by 7.0% and 1.3%, respectively, mostly due to higher revenue at Bristol Water and in the power segment
  • Quarterly AFFO declined by 1.0% in the quarter as a result of higher operating and project development expenses and debt amortization, but increased by 18.2% in the year to date due to higher Adjusted EBITDA and lower maintenance expenses
  • Subsequent to quarter end, completed acquisition of Renewable Energy Developers Inc. and established new corporate credit facility

TORONTO, ONTARIO (November 12, 2013) Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A; RDZ.DB the Corporation) today reported unaudited results for the third quarter of fiscal 2013 ended September 30, 2013. The Corporations Managements Discussion and Analysis and unaudited consolidated financial statements are available at and on SEDAR at  All amounts are in Canadian dollars.

Financial Review

1"Adjusted EBITDA", “Adjusted Funds from Operations”, and “Payout Ratio” are non-GAAP financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”).  As a result, these measures may not be comparable to similar measures presented by other issuers.  Definitions of each measure are provided on page 6 of Management’s Discussion and Analysis with reconciliation to IRFS measures provided on page 7.

2While Bristol Water’s revenue and expenses are fully consolidated into Capstone’s financial results, its Adjusted EBITDA was adjusted to reflect Capstone’s 70% ownership interest, which was held between October 5, 2011 and May 10, 2012, and subsequent 50% interest following the sale of a 20% interest to ITOCHU Corporation on May 10, 2012.

3Consolidated AFFO includes dividends received from Bristol Water, which is more reflective of the cash flow available to Capstone from the operating activities of Bristol Water. 

“We are pleased with the performance of our business during the quarter and in the year-to-date period, which was slightly better than we expected," said Michael Bernstein, President and Chief Executive Officer. "A key focus for us during the quarter was completing our acquisition of Renewable Energy Developers Inc.  We successfully closed the transaction on October 1st, thereby gaining new operating wind facilities and contracted development projects that we expect to contribute to long-term cash flow growth for Capstone and our shareholders.  We look forward to starting construction on at least two of our new development projects later this fall." 

Financial Highlights

Revenue increased by 7.6%, or $6.5 million, over the same quarter in 2012, and by 6.2%, or $16.2 million, on a year-to-date basis.  The increase was mostly due to higher overall power production and revenue growth at Bristol Water arising from higher regulated water rates, which increase annually, and higher water consumption. 

Total expenses increased by 5.9%, or $3.0 million, in the third quarter, and by 5.3%, or $8.1 million, in the first nine months of the year.  The variance in both periods reflected higher operating expenses, due to higher operations and maintenance costs and inflationary increases for energy, consumables, wages and salaries at Bristol Water.  In addition, project development costs were higher, reflecting business development activities related to the acquisition of Renewable Energy Developers Inc. ("ReD").  The quarterly increase was partially offset by lower operating expenses at Cardinal reflecting the decline in gas transportation costs and lower gas consumption due to the facility's scheduled combustion inspection. On a year-to-date basis, Cardinal's fuel expenses were higher as a result of increased power production.

Administrative expenses increased by 10.9%, or $0.2 million, in the quarter due to higher professional fees, but declined by 10.4%, or $0.8 million, on a year-to-date basis, reflecting overall lower staff costs and professional fees.

Adjusted EBITDA increased by 7.0%, or $1.7 million, in the quarter, and by 1.3%, or $1.2 million in the first nine months of the year, primarily reflecting higher revenue at Bristol Water and in the power segment overall.  Adjusted EBITDA growth was partially offset by corporate project development expenses, mostly related to the acquisition of ReD, which were $1.5 million and $2.8 million higher in the quarter and year-to-date period, respectively.  Adjusted EBITDA in the first nine months of the year also reflected the Corporation's reduced 50% ownership interest in Bristol Water compared with its 70% interest for part of 2012.

Adjusted Funds from Operations (AFFO) declined by 1.0% in the quarter, reflecting higher Adjusted EBITDA offset by higher maintenance capital expenditures related to Cardinal's combustion inspection in September 2013 and higher scheduled debt principal repayments compared with last year.   AFFO increased by 18.2% in the first nine months of the year due to higher Adjusted EBITDA and lower maintenance capital expenditures at Cardinal, which completed a hot gas path inspection in the second quarter of 2012.

Financial Performance Highlights by Segment

Power Infrastructure:

Revenue increased by 2.8%, or $1.1 million, in the quarter and by 5.2%, or $6.7 million, in the year-to-date period, primarily reflecting increased power production at Cardinal and the hydro power facilities.  In addition, Cardinal and Whitecourt benefited from rate increases and higher power pool prices, respectively.  These drivers were partially offset by lower power production at Amherstburg as a result of unfavourable sunlight conditions, respectively, in both the quarter and year-to-date period.  Total power production of 428.6 gigawatt hours ("GWh") in the three months ended September 30, 2013 was consistent with average long-term production for the third quarter of the year.

Adjusted EBITDA increased by 11.5%, or $1.7 million, in the quarter primarily reflecting higher power production and significantly lower maintenance and gas transportation costs at Cardinal.  In the first nine months of the year, Adjusted EBITDA increased by 8.9%, or $4.9 million, reflecting higher power production, increased power rates and lower gas transportation costs at Cardinal, which were partially offset by higher fuel expenses due to increased fuel consumption.  AFFO increased by 2.3%, or $0.1 million, in the quarter and by 13.6%, or $4.0 million, in the first nine months of the year. 



1 The Corporation acquired a 70% interest in Bristol Water on October 5, 2011 and subsequently sold a 20% indirect interest in the business on May 10, 2012.

Revenue increased by 11.7%, or $5.3 million, in the quarter and by 7.2%, or $9.5 million, in the year-to-date period, reflecting the annual increase in water rates and increased consumption.  Bristol Water's Adjusted EBITDA contribution to the Corporation increased by 14.5%, or $1.6 million, in the quarter, reflecting higher revenue partially offset by increased operating expenses.  For the first nine months of the year, Bristol Water's Adjusted EBITDA contribution declined by 9.2%, or $3.5 million, reflecting the Corporation's reduced 50% interest in the business.   Adjusted EBITDA before non-controlling interest increased by 14.6%, or $3.2 million, in the quarter  by 7.3%, or $4.7 million, in the first nine months of the year, reflecting revenue growth partially offset by increased operating expenses.

Bristol Water paid dividends of $1.7 million to the Corporation in the quarter, reflecting the change in dividend frequency from semi-annually to quarterly.  Dividends paid in the first nine months of the year totaled $4.8 million, which was slightly lower than in 2012 reflecting the Corporation's lower ownership interest.

During the quarter ended September 30, 2013, Bristol Water made $45 million in capital expenditures, thereby reducing its capital expenditure shortfall by 32%, as part of its approximately $475 million capital program for the current five-year asset management plan ("AMP5"), which concludes in March 2015.  As at September 30, 2013, Bristol Water had cumulative capital expenditures of $344.0 million over the AMP5 period, which was $23.0 million lower than the regulatory plan approved in 2010 but consistent with management's expectations.  Bristol Water expects to achieve its planned cumulative capital expenditures by the end of the AMP5 period.

District Heating

Värmevärden paid interest income of $0.7 million in the quarter and $2.1 million in the year-to-date period compared with $0.7 million and $2.7 million, respectively, in 2012.  The variance in the nine-month period reflected the lower balance outstanding on the shareholder loan receivable as a result of the return of approximately $50 million in capital from Värmevärden in March 2012.  In the first nine months of 2013, Värmevärden's dividends to Capstone increased by 216%, reflecting the distribution of surplus cash attributable to prior years' performance.

Financial Position

As at September 30, 2013, the Corporation had unrestricted cash and cash equivalents of $41.4 million, including $20.4 million from the power segment and $2.4 million from Bristol Water.  Bristol Water has an additional $73.2 million in credit capacity to support its capital expenditure program. 

Approximately $29.7 million of the Corporations total cash and cash equivalents is available for general corporate purposes. As at September 30, 2013, the Corporations debt to capitalization ratio was 64.0%. 

Subsequent Events

On October 1, 2013, the Corporation completed its acquisition of ReD, which is now a wholly-owned subsidiary of the Corporation.  As a result, the Corporation has increased its power portfolio to net 465 MW of installed capacity across Canada and gained an attractive pipeline of contracted development opportunities, primarily in Ontario and Quebec, representing an expected net 79 MW of capacity. The Corporation has agreed to provide credit support for the obligations of ReD under its 6.75% convertible unsecured subordinated debentures (TSX: RDZ.DB) due December 31, 2017 (which are convertible into Capstone common shares) and ReD has agreed to provide credit support for the obligations of Capstone under its 6.50% convertible unsecured subordinated debentures (TSX: CSE.DB.A) due December 31, 2016.

On November 12, 2013, the Corporation entered into a new corporate credit facility with a three-year term maturing in October 2016, and repaid the CPC-Cardinal credit facility. The new facility is structured as a revolver and bears an initial effective interest rate of approximately 3.5%.  


The Corporation expects continuing stable performance from its power generation and utilities businesses.  In fiscal 2013, the Corporation now expects to deliver Adjusted EBITDA of approximately $120 million to $130 million compared to our previously disclosed financial outlook of $115 million to $125 million.  This revised outlook reflects strong performance from our businesses to date in 2013 and the expected contribution from ReD's operating wind power facilities in the fourth quarter of the year, which will be partially offset by higher administration expenses as well as transaction-related costs.  Other assumptions underlying the Corporation's 2013 outlook include:

  • Holding a 50% interest in Bristol Water for the full year following a partial sale of the Corporation's previous 70% interest in May 2012;

  • A lower average effective gas transportation rate in 2013 of $1.95 per gigajoule ("GJ") compared with $2.24 per GJ in 2012;

  • Increased business development activity compared with 2012, which is expected to result in higher corporate costs consistent with historical levels; and

  • Modest overhead costs related to power development activities.

A detailed outlook for the Corporation's power, utilities and corporate segments is available on pages 14 to 18 of the quarterly report.  The Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement ("PPA") for Cardinal.

The Corporation continues to hold meetings with the Ontario Power Authority with the goal of achieving a fair, long-term solution for Cardinal that recognizes the value of the facility and its industrial, economic, social and community importance. The Ontario Ministry of Energy is expected to release its updated Long-Term Energy Plan ("LTEP") before the end of 2013.  While gas-fired generation is expected to continue to play a role in Ontario's electricity mix, the timing of the LTEP may affect the timing of a resolution on Cardinal.

Maximizing the performance of its existing businesses.

The Corporation continues to focus on further enhancing the operational performance of its businesses, which includes preventive maintenance, detailed planning for capital expenditures that boost value, and finding ways to increase cash flow.  The Corporation is currently focused on working with Bristol Water to plan the company's regulatory submission to the UK Water Services Regulation Authority ("Ofwat) for Price Review 14, during which Ofwat will approve Bristol Water's capital program and set the rates Bristol Water may charge customers in the five-year AMP6 period commencing in April 2015.

Pursuing new investment opportunities.

The Corporation is currently focused on integrating ReD into its operations and to advancing its new wind power development pipeline, with construction expected to start on at least two projects this fall.  The Corporation primarily concentrates its business development efforts on Canada, the United States, the United Kingdom, Western Europe and Australia, including operating infrastructure businesses and development opportunities.

1 - See Notice to Readers

Dividend Declarations

The Board of Directors today declared a quarterly dividend of $0.075 per common share on the Corporation's outstanding common shares for the quarter ending December 31, 2013. The dividend will be payable on January 31, 2014 to shareholders of record at the close of business on December 31, 2013.

The Board of Directors also  declared a dividend on the Corporation's Cumulative 5-Year Rate Reset Preferred Shares, Series A (the Preferred Shares) of $0.3125 per Preferred Share to be paid on or about January 31, 2014 to shareholders of record at the close of business on January 15, 2014.  The dividend on the Preferred Shares covers the period from November 1, 2013 to January 31, 2014.

In respect of the Corporations January 31, 2014 common share dividend payment, the Corporation will issue common shares in connection with the reinvestment of dividends to shareholder enrolled in the Corporations Dividend Reinvestment Plan. The price of common shares purchased with reinvested dividends will be the previous five-day volume weighted average trading share price on the Toronto Stock Exchange, less a 5% discount.

The dividends paid by the Corporation on its common shares and the Preferred Shares are designated eligible dividends for purposes of the Income Tax Act (Canada). An enhanced dividend tax credit applies to eligible dividends paid to Canadian residents.

A distribution of $0.075 per unit will also be paid on January 31, 2014 to holders of record on December 31, 2013 of Class B Exchangeable Units of MPT LTC Holding LP, which is a subsidiary entity of the Corporation.

Dividend Reinvestment Plan

Learn more about the Corporations Dividend Reinvestment Plan (DRIP) at

Q3 Conference Call and Webcast

The Corporation will hold a conference call and webcast (with accompanying slides) on Wednesday, November 13, 2013 at 8:30 a.m. EDT to discuss third quarter results.  To listen to the call from Canada or the United States, dial 1-800-319-4610. If calling from elsewhere, dial +1-604-638-5340.  A replay of the call will be available until November 27, 2013. For the replay, from Canada or the United States, dial 1-800-319-6413 and enter the code 1385#. From elsewhere, dial +1-604-638-9010 and enter the code 1385#. The event will be webcast live with an accompanying slide presentation on the Corporations website at

About Capstone Infrastructure Corporation

Capstones mission is to build and responsibly manage a high quality portfolio of infrastructure businesses in Canada and internationally in order to deliver a superior total return to shareholders by providing reliable income and capital appreciation.  Capstones portfolio comprises investments in Canadas power infrastructure, including gas cogeneration, wind, hydro, biomass and solar power generating facilities, representing approximately net 465 megawatts of installed capacity, and contracted wind power development projects totaling an expected net 79 megawatts of capacity.  Capstone also invests in utilities, including a 33.3% interest in a district heating business in Sweden, and a 50% interest in a regulated water utility in the United Kingdom. Please visit for more information.

Notice to Readers

Certain of the statements contained within this document are forward-looking and reflect management's expectations regarding the future growth, results of operations, performance and business of the Corporation based on information currently available to the Corporation. Forward-looking statements and financial outlook are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements and financial outlook use forward-looking words, such as “anticipate”, “continue”, “could”, “expect”, “may”, “will”, “estimate”, “plan”, “believe” or other similar words, and include, among other things, statements found in "Message to Shareholders" and “Results of Operations” concerning the guidance provided on the Corporation's post transaction profile. These statements and financial outlook are subject to known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and financial outlook and, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements and financial outlook within this document are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions set out in the management's discussion and analysis of the results of operations and the financial condition of the Corporation (“MD&A”) for the year ended December 31, 2012 under the heading “Results of Operations”, as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation's profile on

Other potential material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following:  that the business and economic conditions affecting the Corporation's  operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates; that there will be no material delays in the Corporation's power infrastructure development projects achieving commercial operation; that the Corporation's power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; an effective TransCanada pipeline ("TCPL") gas transportation toll of approximately $1.95 per gigajoule in 2013; that there will be no material change in the level of gas mitigation revenue historically earned by the Cardinal facility; that there will be no material changes to the Corporation's facilities, equipment or contractual arrangements, no material changes in the legislative, regulatory and operating framework for the Corporation's businesses, no material delays in obtaining required approvals and no material changes in rate orders or rate structures for the Corporation's power infrastructure facilities, Värmevärden or Bristol Water, no material changes in environmental regulations for power infrastructure facilities, Värmevärden or Bristol Water and no significant event occurring outside the ordinary course of business; that the amendments to the regulations governing the mechanism for calculating the Global Adjustment (which affects the calculation of the direct customer rate ("DCR") escalator under the power purchase agreement ("PPA") for the Cardinal facility and price escalators under the PPAs for the hydro power facilities located in Ontario) will continue in force; that there will be no material change to the accounting treatment for Bristol Water's business under International Financial Reporting Standards, particularly with respect to accounting for maintenance capital expenditures; that there will be no material change to the amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish Krona to Canadian dollar and British pound to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying asset management plan 5 ("AMP5"), including, among others: real and inflationary increases in Bristol Water's revenue, Bristol Water's expenses increasing in line with inflation, and capital investment, leakage, customer service standards and asset serviceability targets being achieved.

Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements and financial outlook, actual results may differ from those suggested by the forward-looking statements and financial outlook for various reasons, including:  risks related to the Corporation's securities (dividends on common shares and preferred shares are not guaranteed; volatile market price for the Corporation's securities; shareholder dilution; and convertible debentures credit risk, subordination and absence of covenant protection); risks related to the Corporation and its businesses (availability of debt and equity financing; default under credit agreements and debt instruments; geographic concentration; foreign currency exchange rates; acquisitions and development (including risks related to the integration of the business operated by Renewable Energy Developers Inc.); environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Corporation's power infrastructure facilities (power purchase agreements; operational performance; fuel costs and supply; contract performance; land tenure and related rights; environmental; and regulatory environment); risks related to Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; economic conditions; operational performance; failure to deliver water leakage target; service incentive mechanism ("SIM") and the serviceability assessment; pension plan obligations; regulatory environment; competition; seasonality and climate change; and labour relations); and risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations). For a comprehensive description of these risk factors, please refer to the “Risk Factors” section of the Corporation’s Annual Information Form dated March 21, 2013 as supplemented by risk factors contained in any material change reports (except confidential material change reports), business acquisition reports, interim financial statements, interim management’s discussion and analysis and information circulars filed by the Corporation with securities commissions or similar authorities in Canada, which are available on the SEDAR website at

The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements and financial outlook. The forward-looking statements and financial outlook within this document reflect current expectations of the Corporation as at the date of this document and speak only as at the date of this document. Except as may be required by applicable law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements and financial outlook.

This document is not an offer or invitation for the subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of any investor. Before making an investment in the Corporation, an investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.